Scenario planning is a form of strategic planning in which a complex, and perhaps unidentifiable, future is determined by asking what-if questions and rehearsing possible responses, should a certain event or scenario occur. The whole idea is to create mental maps of potential futures, and have plans in place that will help enable viable and positive responses.

For many organizations and companies, scenario planning is a very helpful technique that allows strategy to be discussed, especially when there is critical uncertainty in the future environment.

Of course, scenario planning does not involve ends only, but rather means to ends. Scenario planning involves systematic management tools that is built to improve behavior and decision making. Not just one, but many potential future scenarios are imagined.

Scenario planning is a disciplined method. It is also a method that hones perceptions of the future. This is not to say that anything imagined by the scenario planning method will occur, or that scenarios unimagined by the method will not occur, of course. However, the goal is to determine plausible futures, and not necessarily the probable or desired future. The whole process eventually gets those involved to the point where they can change with an industry and become robust employees or personnel.

Further, scenario planning has the added advantage of promoting higher levels of organizational collaboration, which may not occur as much in other forms of strategic planning methods.

Scenarios themselves are data-driven stories or models of the future, that involve hypotheses about how things will proceed. They are imaginative and can stretch thinking, but do not go beyond the realm of possibility. Scenarios are always plausible and logical.

Built together and cohesively, a set of scenarios form what is called an organizing framework. Organizing frameworks can then be used to make sense of conflicting or ambiguous information in a more holistic manner, as they occur today and as they may occur in the future.

One of the strengths of scenarios is that they do not make use of a single and falsely confident prediction based on the current trends and models of the world. Instead, they pull together multiple perspectives and hypotheses for how things might operate, develop or occur. They simultaneously incorporate degrees of uncertainty for how certain things might evolve. Each uncertainty is provided with a different set of outcomes and behavioral trends. There is thus, a very strong predictive modeling aspect to scenarios, which give them one of their more robust characteristics.

Any one industry sees many changes, even over the course of a short period of time. These myriad models may lead to crippled decision making, as there can be too much to take into account. Scenario planning can help with this; scenarios help to relate clusters between trends, forming broad patterns and organizing them into logical frameworks to work from. These frameworks can then serve as comprehensive views, and can help align the critical thinking decision making process of key leaders.

Scenarios are built via an outside to inside perspective. This allows for the identification of external influences and degrees of uncertainties, before beginning to try tackling situations. This is important, because the outer environment needs to be taken into consideration before opinions and decisions should be formed and made. Scenarios work to connect three layers of the environment:

Contextual , or outer environment: this environment includes any social or political influences and trends, as well as any economic or environmental shifts. It also includes any technological changes and advances.

Industry , or transactional environment: this environment includes the dynamics of a particular industry, projected market and industry growth, consumer needs and behaviors, and the behaviors of competitors.

Organizational , or inner environment: this environment includes the operations and products/services of a given organization or company, as well as their branding, financial framework, and their assets. It also involves employee needs and projected employee analyses.

These three environments are thus connected via scenarios and the frameworks they provide.

Scenario planning involves a cyclic approach that involves:

Orienting: this involves determining what the real issues are, and what questions need to be asked. It also identifies current assumptions and inferences made, which may help or hinder understanding of issues.

Exploring: this involves identifying and prioritizing which forces will have the greatest impact on the issue.

Synthesizing: at this step, a framework is developed, which aims to make sense of evidence and determining the directions an organization and an industry are taking.

Acting: at this stage, the individual or group places themselves within the context of each scenario, and ask themselves what it would feel like to be in that environment, how they would react, what would be appropriate ways of reacting, and how they would operate in this sort of environment. It is also at this stage that important questions are asked and acted upon, including what needs will there be and how could they be met.

Monitoring: this involves creating a list of issues and tracking them, collecting data on various scenarios. These are also monitored on a regular basis, and adjusted as necessary.

These steps are similar in a general sense to the steps of critical thinking.

Scenario planning can be applied to a number of things. They can be used to create long term and sustainable future alternatives and strategy, allow for decision making when conditions are uncertain, progress an industry and provide for innovation, develop flexibility and creativity, and align stakeholders to a shared mission and vision of a given organization or company. Of course, the major requisite of scenarios is that they allow for a sustainable and sustained future.

A list of the key concepts of scenario planning to keep in mind are the following:

Focal issue: the question that the scenario seeks to address

Mental map/model: a set of assumptions and inferences that becomes the framework for how the individual or the group react and behave in given situations. These mental maps tend to be implicit.

Official future: this involves explicit communication regarding beliefs and perspectives held by the group, organization or company, as well as the given industry. The official future is, in essence, a collective mental map of the organization.

Driving forces: are the dynamic features outside of the inner environment that will shape future dynamics, in both predicted and unpredicted capacities. These driving forces can be either predetermined, or may be uncertain entity that still have to be accounted for.

Predetermined forces: these are the forces that will occur with a relative certainty within a specified timeframe.

Uncertainties: these involve those elements that are unpredictable aspects of a model of the future. These uncertainties can provide the basis for a variety of scenarios produced.

Scenarios: these are the stories themselves regarding the environment and how it may unfold.

Scenario implications: these are the insights that communicate the understanding and learning that has occurred from the various scenarios. They ask questions such as what challenges and opportunities would the organization or company face, and what kinds of reactions would be most appropriate.

Wild card: this is an unexpected uncertainty that may lead to a change in strategy, and may even necessitate such a change.

Scenarios can be beneficial is protecting against groupthink. Since alternative thinking is necessary in scenario planning, it becomes necessary to go out of the box, and thus, groupthink is avoided. Conventional wisdom can also be challenged during scenario planning, as it becomes necessary to go beyond what it known now, and envision what may be.

Scenarios, as helpful as they may be, can also be abused during strategic planning. Generating a number of scenarios, with various degree of uncertainty, can cause paralysis in leadership. In the face of possible scenarios, some of which we may not even know about, but still have to account for regardless, can cause a deer in the headlights reaction, where there is confusion and a lack of direction, and nothing is progressed, behaviors are static, and things fall apart. To prevent this, it becomes necessary to choose the scenarios that seem most likely, and develop contingencies based on those scenarios. This does not mean that wild cards are not addressed. Rather, the scenarios chosen should be planned alongside uncertainties, and merged with them.

All those involved in the strategic planning must take care to not allow scenarios to muddle communication. Leadership can use scenarios, but should not rely on scenarios to communication with the organization or company. To go before an organization and state, "this or that will be good or bad, but I am not sure which is what," is not good for morale, and will prevent any progress from being developed. Uncertainty must be acknowledged, but it should not be dwelled upon.

Scenarios can also help leaders to avoid looking unknowledgeable or uneducated regarding different situations. A leader who knows a wide range of scenarios, even if they do not communicate them explicitly, can avoid saying or doing things that can later be proven false or wrong.

Complacency may be an issue that develops with the use of scenarios. Just because things have been predicted, and planning has been instigated, does not mean that all bases are covered, and the leadership and organization are free from failure and any culpability that may arise. Always keep in mind that scenarios are not infallible, and an awareness--developed via metacognition--of any false sense of security should be evaluated.

There should always be an awareness of the entire distribution spectrum. Too often, when faced with a number of scenarios, leadership tend to choose those situations that fall to the immediate left and right of the position they are currently in. This bias leaves them blinded to other potential scenarios, ones that may be plausible in the future. When strategizing, those "stretched" scenarios still have to be taken into account, even though they are less probable than other situations.

There are some instances in which scenarios should be avoided, however. Scenarios are not some kind of infallible method of analysis. They can be prone to bias and failure, and in some cases, may hinder progress and development. One situation in which strategists should not utilize scenarios is when uncertainty levels are too high and therefore cannot be built reliably at any level of evidence and detail. Though scenarios can help an organization avoid groupthink biases, they can also produce a sort of groupthink, where all involved believe that the environment can be controlled and grouped and manipulated in some capacity. This is an error in critical thinking, and should be kept in the realm of awareness. Leadership should never think that they have all plausible and probable scenarios in their hands. There could very well be variable situations that may occur, and may be completely unforeseen, regardless of all the strategy put into place.

With a multivariate future, no one spectrum of scenarios should be planned for. There will always be elements that leadership will miss; however, using one major variable will ensure that elements will be missed. It is most beneficial to utilize at least two major variables, and more as needed and beneficial. These variables must not be dependent variables, but rather, independent ones that may or may not interact with each other. Otherwise, all the strategy planned will fall into on broad spectrum, without awareness of alternative realities.

Some rules of thumb regarding scenarios are as follows:

It is helpful to choose those scenarios that are most probable, especially when faced with many scenarios.

At least four scenarios should be developed. A single scenario should contain at least four alternatives. This number four is important because when shown a set of three, people tend to choose the middle route; when shown two, there are not enough choices. Allotting at least four allows all involved to understand the learning and decision making process a bit more.

Scenarios should have catchy names. This may sound silly or trivial, but it scenarios are to become a part of a given organization, it is important that they become part of that organization's culture. Two to four words are sufficient for the title to catch on and be used as company jargon. Playing with memes or cultural notions, as well as pop culture, are most effective.

Listen to different opinions. This helps prevent groupthink, and also broadens the views of the scenarios generated. It also brings about the development of new scenarios.

Keep in mind that even minor environmental changes can have monumental consequences, or at least consequences that can change a company landscape, or parts of its features.